The US economy grew faster than earlier estimated in the second quarter as a key measure of inflation was revised lower, the Commerce Department said today. The department estimated that the economy grew at a 4.0 pct annualised rate between April and June, faster than the 3.4 pct estimated a month ago but a tick below the 4.1 pct gain economists had expected. The Fed's preferred measure of inflation, the core PCE price index, was revised slightly lower to a 1.3 pct gain from a 1.4 pct gain first estimated. This was down sharply from the 2.4 pct rise in the prior quarter and the slowest pace since the second quarter of 2003. Overall inflation, measured by the PCE price index including the volatile food and energy prices, rose a revised 4.2 pct, the fastest pace in a year. It was originally reported a tick higher at 4.3 pct. The economy grew at an anaemic 0.6 pct annual rate in the first quarter, which was the slowest quarterly gain in more than four years. Fewer imports, higher exports, more government spending, an increase in inventories, and lower inflation all contributed to the faster growth in the quarter. Measuring the second quarter over the prior second quarter, the economy grew at a revised 1.9 pct pace, slightly faster than the 1.8 pct first estimated. Over the past 12 months, the overall PCE price index has risen 2.3 pct, while the core PCE price index slowed to a 2.0 pct rise, the very top of the Fed's so-called "comfort zone". Consumer spending, which accounts for as much as two-thirds of the economy, rose a revised 1.4 pct in the second quarter, slightly higher than the 1.3 pct estimated last month. But this was still a major slowdown from the 3.7 pct pace in the first three months of the year. Final sales rose a revised 3.7 pct in the quarter, faster than the 3.2 pct first estimated and nearly three times as fast as the 1.3 pct pace in the prior quarter. The housing slowdown was more of a drag on the economy than earlier estimated, but still less than the prior quarter. Real residential fixed investment fell 11.6 pct in the second quarter, steeper than the 9.3 pct drop first reported but not as steep as the 16.3 pct drop in the first three months of the year.